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tv   U.S. House of Representatives  CSPAN  August 16, 2010 5:00pm-6:13pm EDT

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i will talk to you with respect and i would like for you to do the same with me. when a plane is on loaded, is generally done by a general employee on an airport or is it done by a specific carrier? i seem to recall that it is not a specific carrier. can you clarify that for me? >> when a plane is on loaded -- >> if they are unloading their passengers in florida, we get off the plane, it is in the florida airport, their employees that are unloading at? or does it vary from airport to airport? >> it varies from airport to airport. >> that is an important point.
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my next question is have you collected information on your passengers and what do you know of the number of packages -- has increase or decrease? >> since we began charging for checked luggage, we are checking less luggage than before, so it has decreased. >> in your professional opinion, in your evaluation, what i see on the plane and i can tell you is i have witnessed a dramatic increase of people who have on bags, how much longer it takes people to get on board, and it does get dangerous. is there a safety issue that we might have a concern with with this new policy? >> there is the potential for a safety issue here, and when we talk with the flight attendants, for example, they are really concerned because they are usually the ones that are trying to lift those heavy bags into
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the been as well. there is also the issue of flight delays that are associated with that, trying to get all the bags on, and then, you have situations where people, -- for a while, they would bring a big bag that would not fit. they could get it free by taking it down to the gate, so they're all -- they're all kinds of unintended consequences going on at this point in time. >> ok, and then, i have two quick last questions, so the answer is if we could have a debrief. i believe you had said that the dot had not responded to the recommendations. is that they did not respond or that they have not agreed or disagreed? >> the recommendations in our report? they have not responded.
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it was not an agree or disagree. usually, -- you know, they have 60 days to fully comply in one way or another, so it is not unusual that we are in the situation. >> ok, and then, my last question, i understand, and i read in your testimony that the information is available on your web site. however, the committee -- the community that i represent, not everyone has a computer. not everyone has access to web sites, and many people have been calling their local travel agent, who helps them answer all the questions. if you are providing the information on the website, what is your objective to providing the information to the agencies? >> we do not have that objection. what i had said was -- >> if you do not have that objection, why are you not doing
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it? >> simply because we have not had the ability to see how the system works, and we will not put ourselves at a competitive disadvantage yet. >> in reclaiming my time. that is how it works here. are you saying to me that neither of these gentlemen have provided you an example of how you provide that information? >> what i'm saying -- >> yes or no? has anyone provided to the information on how you could incorporate it? >> not that i'm aware. devilwood you be open to adjusting the system? >> we would be open to considering it, yes. >> now recognize -- recognize the gentleman from arkansas. >> thank you. what are the top priorities in rulemaking? >> what are the top priorities
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in the current rule making? we do not list them in order priority, but this is a rule making that encompasses a broad number of consumer issues that we issued in the wake of our last rule making, so we have tried to be as comprehensive as we could be, understanding that there are always going to be other issues. i would say that true, full price advertising is one of the key principles, that baggage fees be fully disclosed and reimbursable when not delivered. we have also got proposed increased compensation for and voluntarily bombs passengers -- bumps passengers, cancellation within 24 hours without charge. there are a number of additional provisions and, in fact, we have tried with this rulemaking to make the maximum public involvement we could buy a
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partner with cornell university so that the public might find it easier to go to the website and actually comment on the proposal, and then, cornell will summarize those comments and place it on the wall making pocket. >> so you do not feel that certain ancillary phase should be included in the base failure? you are not going that way with the rule making? >> we do not have the authority to regulate fees, routes, or service, so we are trying to discharge our mandate to just to ensure that what the airlines do, they do openly and transparently. >> when do you think the final will be issued? >> we are hoping -- but we can never be sure -- to issue the final will before the end of this calendar year. >> i guess the thing -- and we've only got literally just a minute or so, but is there -- in separating out the baggage --
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and again, i'm the guy that is flying all the time, and that is an extra fee and things, but is it such that i am having the increased fee and not having as much baggage -- is that a good thing as far as transporting people and using less fuel? i guess i'm saying, are there any positive consequences as a result of people not having till we will bags every time they go someplace? does that make sense? arguments, there are and i've heard some of them, on different sides of that issue. we just heard from mr. drilling hand that more carry-on bags could be dangerous, could delay flight loading and unloading. on the other hand, perhaps people are incentive to carry less with them. i personally do not have an opinion. is --uess what i'm saying
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do you carry more people on top? is wait a factor so that you can actually carry more people and, thus, theoretically, you are not having as many planes in the air to affect the environment and fuel and all those kinds of things? is that a factor in reducing the weight? >> as you have indicated, which is a factor, and therefore, you could make that argument. we have not done any work that would indicate what the increment is between baggage and person, but the logic is there. >> thank you very much. >> the chair thanks the gentleman and will announce that we have three votes pending on the floor right now. we will return. members have questions, and i've had some questions as well. i would ask everyone to be back
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in your chairs by 3:40. the subcommittee will stand in recess until 3:40. >> the c-span networks -- we provide coverage of politics, public affairs, non-fiction books, and american history. it is all available to you on television, radio, online, and on social media networking sites, and find our content any time, and we take c-span on the road, bringing our resources to your community. the c-span networks, now available in more than 100 million homes, created by cable, provided at a public service. our coverage of the house transportation committee hearing on airline fees continues now.
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>> the subcommittee will come to order. in your statement, you describe potential revenue for the airport and airway trust funds, and yet, these bags were taxed. how much did you say it would generate for the trust fund? >> are around $200 million. yes, sir. >> obviously it is not in trust fund while the airlines have made a substantial amount of money off of these fees. the trust fund has shown a deficit in the same time. is that correct? >> the uncommitted balance in
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the trust fund has, in fact, been going down. i wanted to point out that part of what we say in our report is that we only are talking about the proportion of the fees that have been charged by airlines because we could not disaggregate some of the other fees, so the total amount is yet to be determined, -- yet to be determined. >> but it is clear from what you have seen that revenue from the airlines as a result of these fees -- obviously, the revenue has gone out, while at the same time, the trust fund is going down. >> that is correct, but i'm not sure i would like them, but both of those statements are true. >> but we would generate $200 million more if in fact the fees that were collected were in fact part of the tax and going into the trust fund. >> yes, sir.
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>> let me ask you, and there are a number of recommendations, several recommendations that you have made to improve disclosure and information on airline- imposed and government-imposed fees to improve airline reporting revenues to the part of transportation. can you walk us through, just for the record to be clear, what some of those recommendations are? >> yes, sir. they fall into two basic categories. the first one is a matter for consideration that we offered to the congress in the sense of if the congress wants to consider taxing the fees, and that is a policy decision that the congress needs to make, but with regard to the recommendation that we made to the various departments -- various dhs, agre
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-- it was the same basic principle. full disclosure. let those apartments know what their refund policies are, let the airlines know what those refund policies are across those agencies. again, it is an attempt to be transparent and disclosed to the flying public. >> in your testimony, you state that in the proposed rule making, that you are asking for comments on the cost and benefits of requiring that two prices be provided in certain air fare advertising. >> the basic principle is we want there to be a full, fair price that includes all the non- optional prices so that it really, apples to apples, can be compared. we are seeking comment, really in an agnostic way, and hoping
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that we can become educated and learned through the rulemaking process what would be useful. is whether in addition to that price the mandatory price that includes these -- it would be helpful to the public to have another price that would be essentially the bare minimum price as well as what people normally do and what they are normally used to being floated. a bag or two, perhaps a seat being selected, and see if there might be some standardized way of comparing the price as well, to give more information to consumers. >> i mentioned earlier when i recognized you that i commend the department of transportation and the secretary for being proactive and taking regulatory actions concerning consumer protection issues, and i'm pleased that you are moving forward with additional
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regulatory protections. regarding deceptive fares and deceptive advertising and greater transparency for airline fees. i frankly do not believe that we are going to get where we need to be unless we do this, either through rulemaking or through action taken by the conference. earlier, he said he did not object. i think he talked about an unfair competitive advantage if one airline doesn't and the other does not. obviously, if you do not have an objection to posting all of the fees, if ever one has to do the same, and he said he would not have an objection. i assume, mr. ridley, you would say the same. is that correct? >> given our situation, where we have very few fees, we would not object. >> let me ask you, in your
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testimony, written testimony, you indicate that spirit believes it is unfair to charge passengers for extra services that they do not use. what do you mean by that? >> thank you. what i mean by that is that different customers ask for different things in terms of their travel, and we think it is unfair to presume that a customer might want or might need to check two bags or might need to have a certain service on board, so we think it is important to only charge them what is necessary for their trip, but then make available in an optional basis other services and auctions that they may be able to use. we think that benefits consumers. we think this results in lower fares and gives customers the option to say, "this is valuable to me, so i will pay for it, or is not valuable to me, and i can
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save some money." >> you also indicate in your written testimony that on funded services do not impose any cost on airport infrastructure, that there is no cost imposed on airport infrastructure. as a result of unbundled services. what do you mean by that? are you saying that checked bags do not put additional cost on an airport? >> what i mean by that is the cost of transporting the passenger are all included in the base fare, and the fees we charge extra for we do not believe add to the burden that the aviation trust fund bonds, so check bags, for example, at cost to the airline, but they did not the to fully use air traffic control. they did not particularly at airport-related costs to the airport. they add to the airline. >> i would respectfully disagree
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with you. i think it is pretty clear that it does, but at this point, i will recognize the ranking member. >> thank you for calling this hearing. i just have a couple of questions. first of all, does anyone on the panel disagree with the statement, when he said that southwest strongly believes that the decision on these charges should be a business decision and left up to the airlines? anybody disagree with that statement? yes? >> i'm not sure i would disagree with the statement. what i felt like i heard mr. ridley say is that it should be left to the airlines as to how they market their products and services. so what did they choose to bundle or not, i, too, believe that as an airline decision.
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the thing that i think was important is that i believe that mr. ridley also would support is transparency. so if that means that you got an airline that as bumbling and one that is not, it just needs to be made clear to the consumer about how you compare those, apples and apples. did i characterize it right? >> i think that is fair, yes. >> let me ask -- in our briefing, it says that through various rulings and guidance, the dot has required that airlines and ticket agents disclose the following fees in air fare advertisements -- fuel surcharges, holiday surcharges, and government fees, among others. do either of you -- or what do you think -- do you think it would add substantially to airline costs or were really substantially decrease airline
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travel if the airlines were required to disclose these things, like extra charges for bags and things, the kind of fees we have been talking about here today? >> mr. duncan, from the work we have done, we have seen no indication that the showing of fees and transparency of fees and disclosure would decrease travel. >> would it be substantial cause for the airlines to do that in some ways? >> again, based on the work we have done, we do not think that it would be a substantial cost to the airlines. the airlines have administrative mechanisms in place starting as a base, and the technology that we currently have makes these kinds of disclosures relatively easy.
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as you heard some of the witnesses today, the market is beginning to rev up to produce all kinds of mechanisms that will make this an easy thing to do. it then becomes an airline's choice, short of, as the chairman said, short of congressional action. then, it becomes the airline's choice whether they want to participate. >> i agree that there is not a substantial cost of disclosing fully the fees in any way that our regulations have suggested. of course, the committee needs no reminding that every rule making goes through a rather rigorous cost/benefit analysis, and they will not get through r&d if it does not have benefits commensurate with costs. i will let all of you respond,
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but let me ask the airlines not only about that question, but also -- and maybe you covered this, but i have votes in other committees and have not been able to hear all of the hearing, but what is the problem with the travel agents? they say that the airlines will not give them the information about these additional fees, and it has caused problems for them. what do you say about that, in response to the travel agents? >> this may be a bit of a clarification on my earlier testimony as well, but i can confirm that spirit provides full detail about its fees and services to all of our partners today, and perhaps, we are not providing it in a format or timeliness or way that they can use it properly, but if we are not doing it that way, we just need to know, and we will do that because we're very open to
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that idea. >> all right. mr. duncan, i'm not sure -- mr.moore might be better one to answer this, but you asked airlines in particular. and southwest, where we saw less than 5% of our bookings either through an online travel agent or travel agent, this is kind of aid to minimus issue -- kind of a de minimus issue. >> is your issue that you do not mind disclosing, but you do not want to be taxed on it? is that the main concern? >> we are fine with full disclosure because, again, we leave with full disclosure, we still will often have the lowest total price, but in regards to tax, we do not believe is appropriate to tax the ancillary fees because in most cases, they do not use the infrastructure that the tax is intended to pay for.
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>> and if they help you make any profit, you are going to pay taxes in that way anyway. is that correct? >> that is correct, and it also allows lower fares to the consumer, which generates more travel, which also generates more tax revenue. >> we are talking about $100 million, which is a lot of money. that is a lot of money, but compared to the billions of dollars of fees that are subject to perhaps this -- we really do not take a position on whether this should be taxed or not because it is not that relevant to southwest airlines. the industry is overtaxed. i will make that point. but in terms of whether the ancillary revenues that are that discussion of the day's hearing, they have come under the excise tax, we just take a position that it is too much taxes. >> mr. mitchell or mr. moore
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want to comment on my earlier question. >> thank you. my comment that i wanted to make surrounded the question that you were acting on difficulty. what i would suggest to you is that today, there are 26 airlines that are cast filing misinformation. they are experimenting with it. "if i have this ancillary fee, how would i file it?" they have done some good work to lay the groundwork internally. those airlines represent 86% in u.s. bookings. meaning from today, the airlines that actually know how to do this represent the vast majority of bookings that we already do. airlines can do this. it does not have to be that difficult. >> i think that there is five reasons why the airlines are
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resisting this. first is, as we said earlier, the first airline to jump into the system and show fares that are 30 percent higher than your competitor is going to lose. >> right, i heard that. >> the second is that there is great prop of italy -- profitability from complexity and confusion. when you purchase a fair, you purchase the thinking that that is what the price is going to be. then, you get to the airport and you are paying 30% or 40% more. had you known about that earlier, you might have made different choices. so there is money to be made in complexity. the third point is that when i was holding this information and travelds's agencies, it is a common view of many industry participants that what the airlines are endeavoring to do is force the agencies to actually pay them for this. what that will do in fact is shift the cost of merchandising
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and distribution onto the backs of consumers. finally, or fourth, let's move passengers in droves to where they do not have comparative shopping capabilities and where they will get higher yields and higher fares, and finally, there is a taxable issue. >> all right, let me ask you this. has the department of transportation received a large number of complaints about these extra fees? have you gotten thousands of complaints or hundreds of complaints? what is the situation there? >> we do get complaints. i can get back to you with the numbers if you would like. i do not have those with me. we do get complaints about a lot of people that are unhappy with fees. they just are. >> all right, thank you very much. i thank the gentleman.
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mr. morton, mr. mitchell, you heard that spirit only discloses all of their fees on line. you do not agree with you on that, do you? >> my perspective would be -- i have shopped through dot-coms. it is a more arduous process that i would like as a consumer. i think my city, and then get a fair that i feel i can rely on, and then i find out there is taxes and fees that get at and on top of that. that were not disclosed initially. then, i'm going to have to put in my personal information on, you know, where i live and all that kind of stuff to get what i believe is a true price, and after all of that, i find out that there might be a seat fee, and that might take place after i pay. >> mr. chairman, i think that's
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the way i would answer that is that i think spirit should be free to unbundle until the cows come home and price to their heart's content, but so long as a carrier is in a gds and providing agencies with their data, they need to provide complete data and do it in a way that is very transparent. i think the marketplace will reward or punish spirit airlines based upon how they conduct their business. >> that is what we hear from the consumers, that they set the prices, and as you said, they are setting fees. just tell us what we are getting. what is the price going to be? so we do not have to spend a half-hour or hour shopping around on a website. as i see it, as he said, the first airline that comes out there and does this and shows a 30% increase over the cost in
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comparison to other airlines, they are not going to do it voluntarily, and they are not going to do it in a uniform manner that consumers can easily understand unless they are required to do it. would you disagree with that? >> i would agree with that 100%. i am going to file with the dot, on behalf of a major corporation whose travel manager came last month with a family friend and took a flight from boston to l.a. the surprise at the airport on baggage fees increased their total trip costs by 20%. he went back to belgium and looked through the gds to find any mention whatsoever of these fees, went back to the travel management company, and there was no mention anywhere, and this is a professional corporate travel manager. if it can happen to him, what does that portend for the average consumer? >> may i make a comment?
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thank you. of the booking process for spirit air, it was accurate as of six months or so ago, but spirit has invested hundreds of thousands of dollars to change our website to wear today, you do not go through the arduous process described, which, again, was accurate to the way we used to work. >> with it being in the best interests of your consumers, your passengers as well as southwest and every other airline out there, if there was a uniform way of posting prices, if they go spirit or united or delta of or southwest airlines -- all the same, easy to find, easy to understand. is that not in the best interest of the consumer? >> it may be, and that is interesting, and i would like to be able to buy a refrigerator that way as well. the reality is that different airlines offer different things to customers, and that diversity is a wonderful thing.
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the world would not be a great place if every airline would like spirit. i would also argue it would not be a great place if everyone were like southwest. the world as a better place because customers have a choice of airlines like spirit and southwest and many other airlines. >> one of the problems when it comes to pricing, though, is that many people do not understand what their choices are. and that they are getting services that they did not know -- paying for services that they did not know that they wanted, nor did they ask for. i think i have made my point, and i think you have made your point. final question, that as i think all of you know, we passed in this committee and out of the house of representatives, and airlines say the bill where we increase the requirements for pilots both in training and in number of hours in the cockpit, and also a number of other things -- flying conditions and
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so on and so forth. out of curiosity, since we have both of you here, what is the starting pay, the entry-level pay for a first officer with spirit airlines? the unbundled. [laughter] >> i do not know the starting gate. i can give you the average pay, and we tend to be a very low seniority airline. our average first officer is about three years senior with the airline, and last year, they earned about $70,000 a year. our average captain is about eight years senior and last year earned about $145,000. >> but you do not know what the starting salary is of a first officer? >> starting wage rate and how that translates to their w-2, i do not have the information with me now, but we could certainly provide that. >> we would request that information.
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>> that is not my area of expertise, but we will get you an answer as soon as possible. >> when i read -- and i understand the business model where we have -- i think in your written testimony, mr. baldanza, you say that since 2007, when we adopted our cultural low-cost carrier business model, our goal has been to provide basic quality air transportation at the lowest possible cost. i understand what that means. my concern is about safety, and that is why i'm interested to know the lowest possible cost. what are your airline and other airlines paying a starting first officer? we found with a number of regional carriers that at least one instance that we know of, the first officer was hired and paid less than $20,000 a year. i'm certain that is not the case
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in southwest, and hopefully, it is not at spirit, but i would like to have that information, if you would supply it to committee staff. >> thank you. i just have one question that probably reveals my ignorance about how the web information is collected and works and so on. but why, if mr. baldanza's airlines posting this information on its website, and presumably airlines post it in some different formats, the burden should not be on you to visit their web sites every day or upgrade it and say what is available, and if you want a matrix, and that airline does not provide that information, and the public would be informed, but they would then have the diversity of choice, or
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is this a legal issue? are the lawyers for you saying you want it provided by the airline so if there is confusion or some difference, the liability is on them, and you can show a piece of paper or something -- is this what we're really talking about? because the information is there on different website. it must be someone is trying to shift legal liability from themselves, or am i misrepresenting the situation? >> i appreciate the question. it is one of those things where i look at it that -- i do not look at it as a legal issue at all. i look at it as a question of complexity. when you have got 600 airlines in the world have their schedules in favor and to actually try to go out and gather all this information in a very laborious fashion, it would be incredibly challenging to try to keep that stuff fresh because as soon as you do, things
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change. the other thing that makes this incredibly hard or impossible, basically, is that these charges are often applied and many times are not, and that level of granular ready is just not made available on the website. it is one of mr. mitchell cozy corporate customers, has negotiated a way, a baggage be, that is not posted on the website. we have no need to know that. it is imperative of the airline to provide that information because we have no knowledge of that level of granular ready. particularly, this whole thing might apply at very low fares, but perhaps they do not apply at the higher fares, and the fees are applied for a seat fees but perhaps not baggage. it is a level of granular rate that could never be gathered by going out and getting it from the carrier website. >> i thought there was search engines and that half the web
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sites are being hit automatically by google or someone and they have ways of updating this practically instantaneously, and people may want to change their business model. we had to go through a government regulatory process, and it could take months. and there are seasonal differences. and if an airplane might have different requirements as to what types of bundling or unbundling would be appropriate. this requires a lot of flexibility on the industry if it is not handled by, or am i misunderstanding the situation? >> i believe that actually introduces the flexibility we need to allow customers to shop in the way they want. when you think about some of the stuff i was discussing earlier about how a consumer can suggest up front, "i'm an elite frequent traveler on united," as an example, flying from new york to l.a. -- and in that, i go and shop. the fees that might apply to me
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-- those are not available on the website. i do not know that. they are certainly not applicable to me. particularly the fact that they may be applied from one corporation or not based on the agreement that i have. there is no level of specificity that would be required in order for that shopping mechanism to really work for the traveler. it is just way too much data that changes far too rapidly. when you think about the way consumers shop, and it speaks to something you were talking about earlier, mr. chairman, fully half the consumers that shop in the online space by at the lowest fare. in other words, you get to about 70% of travelers, and they will have bought within 120% or 130% of the lowest fare, but half the people -- if they have missed
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that $20 charge that may have been incurred, they might have made a very different decision. so there is a level of information that is just going to be lost that consumers would benefit from tremendously and would actually change the way -- the products they may be buying because they are better informed. it is just too much information to try to be gathering laboriously all the time. >> does anyone else have any comments? >> yes, congressman. the airline-owned company that distributes all these fares is in a position to distribute the fees. they have identified 100 ancillary fees that they are ready to go to market with, so if you do the possible combinations, just with one airline, you do the math -- 100 times 100 -- that means that a consumer has a possibility of 10,000 combinations.
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that one airline, perhaps 9:00 to allow the clock. if you are comparing against nine other airlines, that is 100,000 possible combinations. this is orders and orders of magnitude more complex than anything this industry has ever faced before. it's strongly begs for the technology and the standards to get into place so the consumer has the full disclosure he or she needs. >> i thank mr. petri, and, mr. mitchell, you said in your testimony that airlines have a tendency to mislead consumers. >> mr. chairman, that is correct. whether it is trying to look in the gds or travel agent as if you are matching southwest or airtran, or whether it is simply
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misleading the consumer to think that he or she has an all-in price, and then they are surprised, but in addition to that, this is the no man's land for consumer protection. mr. baldanza mentioned going to the store for a refrigerator. lucky for him and the rest of us, we are protected by a large part by the sec. the sec has no responsibility for oversight here, and the consumer has no right to federal preemption, which the airlines can band and fought to expand, so that is central to this idea that the consumer needs protection here. >> we know that there is one person at the witness table that recently went through and examine all of the airlines, and the fees that they charge, and the gao submitted this report to us, so i would ask -- was a simple process to go and understand what fees each
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airline charges? you just went through this, you and your staff. pretty simple for the average consumer to understand? >> the gao cannot own up to it being a simple process, but we were able to identify those fees that we in fact showed in the handout -- >> with your highly professional staff. at the average consumer? >> absolutely. we agree that the permutations are -- can be never-ending, so we are on the side of making it completely accessible and transparent for the consumer. >> and that is the goal of what we are trying to achieve here, and i think what senator
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menendez in his amendment is trying to achieve transparency. so people understand and know what they are getting for the money, and they can compare one price to another and what their options are. do you have any further questions? if not, i will ask very quickly if anyone on the panel has anything to add before we close out the hearing. mr. ridley. >> i just cannot let it fly here. while we're on record that we believe in greater transparency, to sit here and be lumped among all airlines the airlines believe that where there is confusion there is a chance of profit. i would argue that we're there is simplicity, there is a chance for profit, so i do not want to be lumped in with all my brother and i and mr. michel's description. >> anyone else? >> i would as well. i would like to say that this
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has been extremely interesting to us and, i think, the whole industry. and while there may be differences among spirits and many other airlines -- while there may be differences among spirit and many other airlines, the real outrage we think should be on the fairs where the differences measure in the hundreds and thousands of dollars, and when customers are paid -- are asked to pay enormously high fares and taken advantage of because the supply/demand relationship or their ability to be flexible takes advantage of them, that is a more outrageous situation for consumer exploitation. >> that is an issue for a different hearing. let me just thank all of you for being here today and offering your testimony and answering questions of the members of the subcommittee. . rivkin, -- mr. rivkin, i hope
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you will pass on to the secretary that we encourage the department to stay on schedule and move quickly with the rule making. >> i certainly will. >> with that, this subcommittee stands adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the "washington journal" summer series continues this
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week. a new topic every day at nine -- 9:15 eastern. >> what we're really trying to do is take away profit. profit is what drives crime. >> tonight, intellectual property theft on the internet's with immigration and customs department enforcement deputy director. now, secretary of state hillary clinton on the obama administration's global health initiative. she talks about the six-year $53 billion investment that focuses on improving the health of women, children, and newborns around the world. this event is hosted by the johns hopkins university school of advanced studies. it is about one hour and 15 minutes. >> welcome, madam secretary, honored guests.
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this is the school of advanced international studies, a division of the great john's hopkins university. this is a special greeting from me to our first-year students, whom i have not officially welcomed because they're just starting their orientation this next week. students come from more than 70 countries, and even with u.s. cabinet officials of national standing, it is our custom here usually because -- to find out the stepping stones in the careers of every speaker as a school, but secretary clinton needs no such introduction. her fame extends around the world and across generations, so let me offer and said to brief you on why it gives me such pleasure to welcome you here today. first, i would boast that i can think of no university in the united states which offers a more distinguished an
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appropriate venue for the secretary's speech on the global health initiative. johns hopkins medicine, the bloomberg school of public health -- mayor bloomberg is certainly from the same state -- involving people and nationalities who come to baltimore to study their and institutions with partners all over the world and programs beyond. we are proud to be trailblazers, having established the global health and foreign policy initiative, and professor feldbaum has been chosen as a white house fellow and will be joining the highly distinguished director highlyusaid to work in the health field in the coming year.
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we are especially happy to host you and to welcome the director of usaid because of our lifelong affiliation with the state department. as we come back -- compare, my colleague has provided a long list of senior officials who have graduated from here. we presently have about 300 alum working in the state department and another 100 at a.i.d. our graduates work in more than 140 countries. my second comment has to do with our speaker today. students come here because they have chosen in education to prepare themselves as leader for careers in global affairs, whether in the process of non- profit or public sector. they are always on the lookout for role models. what a privilege it is to welcome the secretary of state
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to our school. you can imagine how many of our american students would consider that position, as grueling and demanding as it is, to be the chemical of their career ambition, but our young women would probably stress that the lessons from any career require looking through the fame to the ingredients of success. secretary clinton's seemingly unending curiosity about the world are around her, the passion she has shown throughout her life to improve the lives of others, and the discipline and hard work she brings to every task -- those traits -- curiosity, passion, and diligence -- are the recipe for building a worthwhile career at any age. and when they are enriched by the wisdom of vast experience, the public is especially well served. madam secretary, the podium is yours. >> thank you so much. [applause]
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thank you. it is such a pleasure to be here again, and i want to thank the enough for that warm and thoughtful introduction, -- i want to thank the been for that warm and thoughtful introduction, but this is such an exceptional institution. i had no idea that we had 300 of your alumni, but i see in action every day the results of the work, the research, the preparation, and study that goes on here. we are the very proud employer of verysais alumni, and i hope that there are more of you who will be joining our ranks in the years to come. in addition to the contribution
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that johns hopkins has made in the field of diplomacy and international law, i want to add to what dean einhorn said about the contribution in health. hopkins is home to excellent medical and nursing schools and home to the bloomberg school of public health. that school cosimo of, protecting health, saving lives, in billions at a time, captures both the possibility and the responsibility inherent in the pursuit of better health, whether here in our own country, or in communities around the world. new breakthroughs and new knowledge about how to fight disease and save lives only add to our responsibility as researchers, teachers, students, government officials, and as a nation. each of us, i believe, is called to find ways to bring those solutions to the people who need them wherever they are. many contributors to global
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health are here with us, including representatives from several partner and donor countries, ngo's, the private sector, multilateral institutions, and public private enterprises. i want to acknowledge your and their outstanding contributions to saving lives around the globe, often millions at a time. that is a mission i would like to discuss with you today, how the obama administration is building upon our country pose a longstanding commitment to global health by bringing life- saving prevention treatment and care to more people in more places. this is a signature of american leadership in the world today. it is also an issue very close to my own heart. i have been privileged to visit many parts of the world on behalf of our country over the last 20 years, and i have come
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to know countless people who are living proof of what successful global health programs can do. i have met hiv-positive farmers in kenya who now have the strength to spend their day in the fields of earning a living thanks to anti-iraq for viral drugs. children in angola who wake up every morning and then head off to school eager to learn, and afflicted by malaria. new mothers in indonesia who proudly show off healthy babies, brought into the world with the help of trained midwives. men and women who have grown into adulthood resisting diseases because they had childhood immunizations against polio or measles. these are but a few of the faces of global health, people who are not only alive but also contributing as parents, workers, and citizens thanks to the government organizations,
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foundations, and universities like johns hopkins that collaborate to bring medical care and education about healthy behavior to more parts of the world. these are also the faces of americans' commitment. no nation in history has done more to improve global health. we have led the way on some of the greatest public health achievements of our time. smallpox plague humankind for thousands of years until we helped ended with the world health organization's eradication campaign in the 1960's and 1970's. the expanded program on immunization has brought life- saving vaccines to nearly 80% of the world's children, up from less than 5% when the program began 36 years ago, and it has done so in large part thanks to
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u.s. dollars and support. the global distribution of micronutrients, which we helped pioneer, has protected the health of many millions of young children and pregnant women, and we are the global leader in the fight against neglected tropical diseases, treating 59 million people in the past four years alone. we help prevent and treat malaria for more than 50 million people every year, and we provide nearly 60% -- 60% -- of the world's donor funding for hiv and aids. all told, 40% of the total global funding for development assistance comes from the united states. this is clearly not a democratic or republican issue. this is a non-partisan issue that really comes from the heart of america, and our leadership in this field has been possible
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because of strong support on both sides of the aisle. i commend the bush administration for its groundbreaking work in global health, and in particular, in two of our country's flagship programs, the president's emergency plan for a belief and the president's emergency plan for aids initiative, and i would like to acknowledge two people who helped make this program possible, the former aids coordinator, and the current head of emi. beyond government, american organizations are making extraordinary contributions. from the bill and melinda gates foundation, which has given billions to revise immunization campaigns and discover new vaccines and other tools to prevent and treat disease, to the carter center, which has led the global campaign to eradicate the debilitating guinea worm parasite, to the
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clinton foundation, which has worked with pharmaceutical companies to make aids drugs more affordable for millions, and to hundreds of other organizations across america that are finding innovative ways to deliver life-saving and life improving care to people worldwide. churches and faith communities have also led the fight to bring treatment to those in need. including by deploying health volunteers that sometimes face dangerous circumstances to serve people in places where little or no care exists. just two weeks ago, medical volunteers from several countries, including the united states, were murdered in afghanistan as they traveled from village to village to treat eye conditions and run a dental clinic. that was a terrible loss for the families, terrible loss for the world, and it was a terrible loss for this people who had
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been and would have benefited from their health. stories like these remind us that strengthening global health is not only a deeply held priority for our government, but for many american citizens and our nation as a whole. and it is an important part of our national story priority for our government, but our nation as a whole. and it is an important part of our national story, one that thoroughly as it should be. today, on behalf of the obama administration, i'd like to in america's work in healthit's called the global health initiative, ghi for short, and it represents a new approach, informed by new thinking and aimed at a new goal. to save the greatest possible number of lives, both by increasing our existing health programs and by building upon them to help countries develop their own capacity to improve
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the health of their own people. now, before i discuss the specifics of the initiative, let me just take a step back. some may ask why is a secretary of state giving a speech about global health. there are a lot of other crises in the world, as i am well aware. some might accuse me of taking a little break from those crises to (laughter) come to sais to talk about global health. what exactly does maternal health, or immunizations, or the fight against hiv and aids have to do with foreign policy? well, my answer is everything. we invest in global health to strengthen fragile or failing states. we have seen the devastating impact of aids on countries stripped of their farmers, teachers, soldiers, health workers, and other professionals, as well as the millions of orphaned and vulnerable children left behind, whose needs far exceed what any government agency can provide. the destabilizing impact of
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aids led the clinton administration to categorize it not just as a health threat but a national security threat, a position later echoed by then secretary of state colin powell. and the center for strategic and international studies, a think tank focused on national security, launched a commission on smart global health policy co-chaired by helene gayle of care and retired admiral william j. fallon, to find new strategies for global health, because we believe that will help us build a safer, more secure world. we invest in global health to promote social and economic progress, and to support the rise of capable partners who can help us solve regional and global problems. we have seen places where people who suffer from poor
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health struggle on many levels. poverty is usually widespread. infrastructure is usually incomplete. food production and school enrollments are usually low. people who would otherwise take the lead in driving progress for their families and nations are instead dragged down by disease, deprivation, and lost opportunity. we invest in global health to protect our nation's security. to cite one example, the threat posed by the spread of disease in our interconnected world in which thousands of people every day step on a plane in one continent and step off in another. we need a comprehensive, effective global system for tracking health data, monitoring threats, and coordinating responses.
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the need for such a system was driven home in recent years with the spread of sars and the h1n1 virus. it is cheaper and more effective to stop an outbreak when it emerges, before it becomes a global threat. but that is very hard to do in places where health and public health services are scant or nonexistent. we invest in global health as a tool of public diplomacy. for millions of people worldwide, the prevention, treatment or care that the united states makes possible is their main experience of us as a country and a people. and it can be a very powerful one. giving people a chance at a long and healthy life or helping protect their children from disease conveys as much about our values as any state visit or strategic dialogue ever could. and we invest in global health as a clear and direct expression of our compassion. millions die every year simply because they lack access to very simple interventions, like bed nets, or vitamin-fortified food, or oral rehydration therapy. as a nation and a people, we
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cannot, we must not, accept those senseless deaths. it's just not in our dna. that's why americans frequently report that they support their tax dollars going to global health programs not because of what the money can do for us, but because of what it can and does do for others. few investments are more consistent with all of our values and few are more sound. global health is a prime example of how investing our resources strategically can have an immediate and lasting impact on people, communities, and countries. the list of diseases and deficiencies that threaten lives and livelihoods across the world is nearly limitless, but our resources are not. so therefore, we must be strategic and make evidence- based decisions in targeting the most dangerous threats, to
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ensure that our investments that, after all, come from the american taxpayer, deliver results. and we must also must stay focused on the long-term picture not only addressing the urgent needs that people have today but building the foundation for better health tomorrow and for the next generation. this thinking informs every aspect of the global health initiative, which president obama addressed last year. the united states is investing $63 billion first, to sustain and strengthen our existing health programs, and second, to build upon those programs and take their work to the next level by collaborating with governments, organizations, civil society groups, and individuals to help broaden the improvements in public health that we can expect. we're shifting our focus from solving problems, one at a time, to serving people, by considering more fully the circumstances of their lives and ensuring they can get the care they need most over the course of their lifetimes. consider the life of a woman in one of our partner countries. she lives in a remote village
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that has been home to her family for generations. her parents went their whole lives without ever seeing a doctor, but now, thanks to the hard work of the international community, some quality health care is available to her. within walking distance, there is a clinic supported by pepfar, where she first found out that she has hiv and now receives the antiretroviral drugs that keep her healthy. if she makes a longer journey by bicycle or bus, there is another clinic where she can receive prenatal care and where her children can receive immunizations.
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sometimes health services come right to her door, in the form of health volunteers bringing bed nets to protect her family from malaria. but while she can receive care for some health problems, for others she is on her own. her local clinic is well- stocked with antiretrovirals, but it is empty of antibiotics or contraceptives. if she has trouble giving birth, the nearest facility equipped to perform emergency surgery is hundreds of miles away, so she faces the very real risk of becoming that 1 in 22 women in sub-saharan africa who die in childbirth. and while her home has been sprayed for mosquitoes, she has no access to clean water, so her children may escape malaria
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only to die from diarrheal disease. there is no question that this health landscape is much improved from just a few years ago. but its short-comings are significant. there is too little coordination among all the countries and organizations, including in our own government, that deliver health services, so critical gaps in care are left unaddressed. there is too little integration. diseases are often treated in isolation rather than bundled together, forcing people like this woman to travel to multiple clinics to meet their and their children's basic health needs. there is too little innovation focused on designing technologies and strategies that can work in resource-poor places and help the people who
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are hardest to reach. step back even further and another problem comes into view. a lack of in-country capacity. in many places, donor countries and outside ngos have stepped in to deliver critical services that countries didn't have the money or the expertise to deliver themselves. but while that is absolutely the right response to an emergency, it is a temporary fix, not a long-term solution. yet in too many places, it has come to serve as a long-term solution. as a result, this woman's current access to care is erratic, and her future access to care is uncertain. she is vulnerable to the vicissitudes of funding cycles and development trends in places far from where she lives. she has little control over the
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quality of care provided to her and her family, while if her elected leaders were more directly and more heavily invested, she and her fellow citizens would have more of a voice in the system. the fundamental purpose of the global health initiative is to address these problems by tying individual health programs together in an integrated, coordinated, sustainable system of care, with the countries themselves in the lead. we are taking the investments our country has made in pepfar, the president's malaria initiative, maternal and child health, family planning, neglected tropical diseases, and other critical health areas building on the work of agencies across the federal government, such as the centers for disease control and expanding their reach by improving the overall environment in which health services are delivered. by doing so, our investments can have a bigger impact and patients can gain access to more and better care, and as a
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result, lead healthier lives. to illustrate how the global health initiative will work, consider how it will impact one of our most successful global health programs. pepfar. in the past seven years, pepfar has provided millions of people with prevention services across africa, asia, and the caribbean. it has also changed the conventional wisdom about treatment. before pepfar, many believed that treating people with hiv in poor countries was impossible, because the drugs were effective only if they were taken according to a precise daily schedule and with sufficient food. for people living in places with food shortages and without health clinics, pharmacies, or health professionals, it seemed like treatment would forever be
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out of reach. but the united states could not accept the injustice of allowing millions to die when we did have the drugs to save them. and through pepfar, we set up clinics, trained health professionals, and improved shipping and storage. so the experiment worked. seven years ago, the number of people in sub-saharan africa on antiretrovirals was fewer than 50,000. today, more than 5 million people in the developing world are safely and effectively using these drugs, and pepfar is supporting about half of those people. under the global health initiative, we will continue pepfar's success by increasing its funding. in 2008, funding forfa


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